City could lose $2.4m under governor’s budget Manager details how local taxes would rise if Legislature OKs plan

Thursday

Jan 24, 2013 at 3:15 AM

By Ellen W. ToddSanford News Writer

SANFORD — The City of Sanford stands to lose more than $2.4 million in state funds under Gov. Paul LePage’s proposed biennial budget for fiscal years 2014 and 2015, according to a presentation by City Manager Steven Buck at Tuesday’s council meeting.

Buck said the governor’s proposed budget contains cuts that will — if passed — have a significant impact on local property taxes in communities throughout the state.

Among the changes LePage has proposed are to eliminate revenue sharing payments to towns and cities for the next two years, eliminate the homestead property tax exemption for homeowners under 65, and to shift the excise taxes collected by municipalities on commercial tractor-trailer trucks to the state highway fund.

The proposed budget also reduces the amount of personal property tax reimbursed to towns and cities under the Business Equipment Tax Reimbursement (BETR) program, which exempts $13 million of valuation for businesses.

Maine’s Municipal Revenue Sharing program was established in 1972, Buck said, to “stabilize the municipal property tax burden and to aid in financing all municipal services....” Since 2009, he said, the state has been “raiding” the fund intended for Maine’s towns and cities for towns and cities. Under the governor’s proposed budget the state will keep an estimated $139 million in fiscal year 2014 and $144 million in fiscal year 2015, Buck said.

Sanford currently receives $1.8 million in state revenue sharing funds and the loss of those funds would result in a 6.68 percent increase in taxation. For a homeowner whose home is valued at $160,000, that represents a tax increase of $206.55.

The proposed shift in the excise tax on tractor-trailer trucks would mean a loss of $123,390 to Sanford, based on the current year’s budget. That represents a 0.46 percent increase in taxation, or an increase of $14.16 on a home valued at $160,000.

The elimination of the current $10,000 Homestead Exemption, of which 50 percent is reimbursed by the state, would mean a loss of $393,645 to Sanford and would cost the average homeowner $193.20 in additional taxes. The governor’s plan does, however, increase the Homestead Exemption for those 65 and older to $20,000.

Buck said the proposed change in the Business Equipment Tax Reimbursement would mean a loss to Sanford of $150,696 in personal property taxes that would no longer be reimbursed by the state. For the local homeowner, it would mean a $17.29 increase in taxes on a $160,000 home.

If approved by the State Legislature as proposed by the governor, the changes would amount to a loss of revenue to Sanford of $2,467,731, which translates to a 14.40 percent increase in the mil rate, or a $431.20 increase on a $160,000 home.

Buck pointed out that the figures he presented at the Jan. 22 council meeting are based on the current year’s budget and current property valuations. He pointed out that the information did not include changes to the school department’s budget that may be reflected in the governor’s proposed budget.

“I urge people to strongly oppose this [budget],” said City Councilor Brad Littlefield following Buck’s presentation. He urged citizens to contact their state legislators and voice their opposition to the proposed budget.